Carpooling With Hertz And Dollar Thrifty

Hertz will be purchasing Dollar Thrifty Automotive, creating a car rental giant with almost 10,000 locations. Combined cash and stock cost will make the Hertz Dollar Thrifty merger worth about $ 1.2 billion. The company, which will still be known as Hertz, will be owned 94.5 percent by Hertz stockholders, and 5.5 percent by the Dollar Thrifty investors.

Value of Thrifty Dollar going up

Dollar Thrifty will get $ 41 a share from Hertz Global Holdings, the owner of Hertz Rent-a-Car. One year or so ago, Dollar Thrifty stocks were trading between $ 1 and $ 2 a share. Dollar Thrifty shares went above $ 42 a share in early trading Monday morning. For a company that was drowning in low demand and high costs just one year ago, that is a surprising turnaround.

Hertz plans for expansion

Once Hertz completes the purchase of Dollar Thrifty, it will be able to boast 9,800 locations and a huge rental fleet. The company has announced that it has found about $ 180 million in “potential cost cuts” from combining Hertz with Dollar Thrifty. This cost-cutting, combined with increased revenue from additional locations, should pull Hertz out of the losses they have been posting. Over the last two years, per-share losses of Hertz stock have been between 12 and 51 cents. Combined with Thrifty Dollar, Hertz has said that they will return to profitability in the next 24 months.

Services with an increasing demand

There has been an increase in both business and vacation travel, which has improved demand for car rental services. Rental cars have also become an alternative for many city-dwellers who need a car for only a day or two. Hertz launched Connect By Hertz in 2008, an attempt to compete with car-sharing giant ZipCar. With more lenient age requirements and more locations already in place, Hertz is able to offer wider service than ZipCar. Hertz Connect is making an impact in the college market especially, where the 18-year old age requirement goes over much better than ZipCars 21-year old requirement.